iShares Expands Muni Bond ETF Ladder Strategy

BlackRock’s iShares is expanding on its suite of Muni Bond target-date ETFs to help investors extend their muni bond ladder strategy to hedge rate risk ahead.

The recently launched iShares iBonds Dec 2024 Term Muni Bond ETF (Cboe: IBMM), which has a 0.18% expense ratio, will help investors prolong their muni bond ladder strategy as the iShares iBonds Sep 2018 Term Muni Bond ETF (NYSEArca: IBMG) is set to mature at the end of August this year.

IBMM tries to reflect the performance of the S&P AMT-Free Municipal Series Dec 2024 Index, which is comprised of investment-grade, non-callable U.S. municipal bonds maturing in 2024. The fund will help investors gain exposure to tax-exempt income, expand on a bond ladder and manage interest rate risk.

These defined-maturity bond funds typically buy bonds that mature in the year the ETF will terminate, ensuring that investors can collect the bonds’ face value at maturity, along with a steady income stream along the way. Consequently, investors are meant to buy-and-hold these securities until maturity.

iBonds Target-Date ETFs to Help Maintain a Steady Income Stream

“iBonds ETFs are designed to provide a yield-to-maturity profile comparable to that of the underlying bond portfolio and seek to preserve an investor’s anticipated yield-to-maturity through a combination of monthly distributions and a final end-date distribution,” according to iShares.